
Thai manufacturers may succumb to a new flood of cheap products from China if the government fails to launch measures to deal with the entry of Chinese online retailer Temu, says the Federation of Thai Industries (FTI).
With Temu planning to give discounts of up to 90% on products sold on its platform, the prospect of many more factories shutting down becomes even more likely as their products are less competitive than those of their Chinese rival, according to the federation.
Temu will attract customers with low-cost products because operating costs in China, including energy prices and wages, are lower than in Thailand, said Apichit Prasoprat, vice-chairman of the FTI.
"The arrival of the new e-commerce platform will intensify competition in the Thai market as cheap Chinese imports are expected to increase," he said.
The FTI is worried that the government's ongoing measures to prevent the influx of cheap products from overseas may not protect local industries.
The Industry Ministry announced last year that the Thai Industrial Standards Institute (TISI) would work with the Customs Department to inspect the quality of imported goods, especially those under the supervision of the TISI, as a way to solve the problem.
Industry Minister Pimphattra Wichaikul did not elaborate on where importers bought the goods from, saying broadly that they were from "neighbouring countries".
According to the FTI, China tends to export its goods to Asean countries, including Thailand, especially after the US-China trade war broke out that is affecting its international trade.
Chinese traders target Thailand because of the high rate of online shopping carried out by Thai people.
As Chinese imports further increase, some manufacturers have halted production and decided to change their business by importing goods from China for sale instead.
The state's move to impose a 7% value-added tax on imported goods with a value not exceeding 1,500 baht, as well as the fact that many sellers are able to secure a gross profit of 30-35% from the sale of such goods, may not be enough to stop the influx of Chinese products, said Mr Apichit.
He expects the number of industries under the FTI that are affected by low-cost Chinese products would increase to 30, up from 25. Among the industries affected are steel, textiles and garments, and consumer products.
Industrial officials are closely monitoring the situation and continue to have the TISI carry out serious inspections of products imported from neighbouring countries, said Warawan Chitaroon, director-general of the Office of Industrial Economics.
Authorities are also working with logistics companies to check the warehouses where many such imported products are kept, she said.
"If the government does not effectively cope with the problem, it will affect Thailand's Manufacturing Production Index and GDP in the industrial sector," said Mrs Warawan.